According to one source, 64% of new vehicle purchases are financed in the United States. Thus, for a majority of new vehicle purchases, a loan provider takes on some measure of loan delinquency risk. If a borrower fails to meet the obligation to pay off the loan, the purchased vehicle may be repossessed and sold at auction. An estimated 10 million vehicles were delinquent in 2009 and between 3.5-5.0 million vehicles were repossessed.
One way to reduce the loan delinquency rate is reminding borrowers ahead of payment due dates that a payment will be due. However, if the borrower did not leave current contact information with the loan company, or if the contact information became out-of-date, it is difficult for loan companies to reach the borrower to send out the reminders, let alone to ensure that the borrower receives them.
Some lenders have strategies for preventing delinquencies that start with a borrower contacting the lender. However, in many vehicle repossessions, the borrower may be unaware of any delinquency and therefore unable to initiate lender contact. In other cases, customers in later stage delinquency may not understand the critical need to work with the lender to avoid an impending repossession. In fact, many vehicles are repossessed with the lender never having successfully contacted the borrower regarding the delinquency.